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Japan Stocks Drop as Yen Climbs After China Exports Fall

Japanese shares retreated, with the Topix index slipping from a seven-week high, as the yen strengthened amid risk aversion after China’s exports fell the most since 2009.

Fanuc Corp., which supplies robotics to Chinese factories, lost 1 percent. Mazda Motor Corp., a carmaker that gets 73 percent of sales outside Japan, slid 1.1 percent after rising 0.2 percent. Fujitsu Ltd., a computer manufacturer, dropped 3.3 percent after its rating was cut at Citigroup Inc. Dream Vision Co., an Internet-shopping site operator, jumped 67 percent above its initial public offering price on its debut on the Tokyo Stock Exchange Mothers market.

The Topix fell 0.1 percent to 1,195.20 at the close in Tokyo, after yesterday rising to its highest since May 22. Volume was 16 percent below the 30-day average before a Bank of Japan policy decision tomorrow. The Nikkei 225 Stock Average slid 0.4 percent to 14,416.60.

“The stock rally is taking a pause as the yen climbs higher,” said Masaaki Yamaguchi, an equity market strategist at Nomura Holdings Inc., Japan’s biggest brokerage by market value. “China’s data tell you two things. First, a drop in China’s exports means the global economic recovery isn’t that strong. And second, China’s economy itself is facing headwinds.”

Abe Policy

The Topix gained 4.8 percent last week, bringing its increase over three weeks to more than 12 percent, the most since April 2009. After plunging as much as 18 percent from a May 22 high, the gauge has rebounded amid optimism Prime Minister Shinzo Abe will push through economic reforms following elections on July 21.

The Bank of Japan began a two-day policy meeting today. The board will leave its bond-buying program unchanged, according to all 20 economists in a Bloomberg survey. Thirteen of them see no additional easing in the next six months.

The central bank will also discuss upgrading its assessment of the country’s economy by using the word “recover” for the first time in more than two years, people familiar with the bank’s discussions said earlier this month.

Futures on the Standard & Poor’s 500 Index slipped 0.1 percent today. The gauge yesterday climbed 0.7 percent, a fourth straight day of gains. Minutes of the Federal Open Market Committee’s June meeting will be released today and Fed Chairman Ben S. Bernanke will speak at a conference.

China Trade

China’s overseas shipments fell 3.1 percent from a year earlier, the General Administration of Customs said in Beijing today, compared with the median estimate of a 3.7 percent gain in a Bloomberg News survey of 39 economists. It’s the biggest decline since 2009. Imports slipped 0.7 percent after a 0.3 percent drop in May.

Fanuc, which gets about half of sales from Asia, sank 1 percent to 14,760 yen. Sumco Corp., a chipmaker that counts Asia excluding Japan as its biggest market, slumped 2.5 percent to 1,119 yen.

“We can’t get optimistic about China,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees about $111 billion. “It had been pushing too hard to expand its economy and ended up with massive overcapacity. Its situation now is very similar to how Japan’s economy expanded in the bubble era and then collapsed.”

Yen Rises

Exporters fell as the yen gained against all of its 16 major counterparts, weighing on their earnings outlook. Mazda lost 1.1 percent to 435 yen. Sony Corp., a consumer electronics maker that generates 68 percent of sales abroad, declined 0.7 percent to 2,187 yen.

Fujitsu Ltd. dropped 3.3 percent to 411 yen after its rating was cut to neutral at Citigroup.

Two companies made trading debuts on the TSE Mothers market today. Dream Vision soared 67 percent to 4,340 yen after surging as much as 127 percent. Photocreate Co., a provider of photography services, went untraded on its first day, with bids to buy outnumbering offers to sell by three to two.

Hitachi Zosen Corp. climbed 2 percent to 153 yen after the Nikkei newspaper reported the industrial-machinery maker will increase output at a joint venture in India.

The Topix traded at 1.27 times book value, compared with 2.44 times for the S&P 500 and 1.66 times for the Stoxx Europe 600 Index. The gauge’s 30-day historic volatility was at 34.95 today, retreating from its July 2 high of 43.22.

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